A dispute over the scope of an employer’s insurance policy

The case

The Rugby Football Union vs Clark Smith Partnership Ltd and FM Conway Ltd [2022] EWHC 956 (TCC)
Before Mr Justice Eyre
Technology and Construction Court
Judgment delivered 29 April 2022

The facts

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During 2012 the RFU engaged several contractors in connection with a project to improve Twickenham Stadium for the 2015 Rugby World Cup. The RFU advised contractors that it was considering establishing an owner-controlled insurance programme to provide an insurance fund as the sole remedy for making good any losses associated with the project.

On 19 June 2012 the RFU issued a letter of intent to Conway for the high-voltage cable ductwork package. The letter of intent confirmed that the contract would be based upon the 2011 JCT standard form and also required Conway to provide evidence of its insurance cover including as to CAR.

The project insurance policy taken out by the RFU on 17 July 2012 confirmed that the insured property included the contract works and identified the insured parties as comprising the RFU and contractors and subcontractors of any tier engaged to provide goods or services. The policy excluded liability for rectification works as a result of defective design, specification materials or workmanship. While the policy referred to the works package for the high-voltage cable ductwork, Conway was not named.

On 19 October 2012 the RFU entered into a contract with Conway based on the JCT standard form. The contract particulars provided that in respect of insurance, Option C was to apply which provided for the employer to maintain cover for existing structures and their contents and all risks of the works.

Following installation of the ductwork by Conway in accordance with a design by Clark Smith, the high-voltage cables suffered damage being pulled through. The RFU spent £4,440,909.45 on rectification works and recovered £3,334,405.26 from its insurers. In March 2021 the RFU and the insurers commenced proceedings against Clark Smith and Conway, claiming damages for defective design and deficient workmanship.

On 19 March 2021 Conway issued a Part 8 application seeking declarations that as a co-insured under the RFU’s project policy, it had the benefit of the cover under the policy to the same extent as the RFU and thus: (i) the RFU could not claim against it for losses covered by the policy; and (ii) the insurers could not make a subrogated claim against Conway in respect of the £3,334,405.26. The court directed these questions be tried as preliminary issues.

The issue

Was Conway entitled to the declarations?

The decision

The judge confirmed the principle that an insurer cannot exercise rights of subrogation against a co-insured under a policy in which the co-insured has the benefit of cover in respect of the loss or damage that the insurer seeks to pursue by way of subrogation.

Where Conway was not an identified party in the project policy, the judge considered that the preliminary issues could not be determined solely by construing the terms of the policy but by reference to the RFU’s intentions when taking out the policy and the contractual arrangements made between the RFU and Conway.

Having reviewed the evidence concerning the 2012 exchanges, the judge rejected Conway’s submissions; first, that when read together, the letter of intent, the policy and the JCT contract indicated that the RFU and Conway were insured to the same extent in respect of the same loss and, second, that these documents demonstrated this had been the RFU’s intention.

The judge observed that the RFU’s mooted owner-controlled insurance programme to provide an insurance fund as the sole remedy for losses associated with the project was not provided for in clear and express terms in the JCT contract between Conway and the RFU: this was significant where the JCT contract set out a detailed structure for allocating risks and responsibilities but included no relevant amendments to the express provision for Option C.

Hence Conway was not entitled to the declarations: while the project policy insured both the RFU and Conway, they were not insured to the same extent in respect of the same risks and, in particular, Conway was not co-insured in respect of any losses suffered by the RFU in consequence of defective workmanship in the ductwork for which the insurers had already paid out.


Many construction contracts and PFI agreements will provide for contractors and subcontractors to be co-insured under the employer’s policy. However, being named as an insured does not on its own make the contractor a party to the policy: the extent to which the employer’s policy provides cover will also depend upon terms of the contract between the employer and the contractor.

Ted Lowery is a partner in Fenwick Elliott